Updated Factors and Data Requirements for Calculating RS Plan Annuity Benefits
In compliance with federal guidance and leading industry practice, NRECA is updating certain actuarial factors and data requirements when determining the optional forms of annuity benefits in the Retirement Security (RS) Plan. The updated actuarial factors reflect the fact that people are living longer in retirement than when the previous factors were adopted. These new actuarial factors also take into consideration the age of the spouse for married participants, or the age of a beneficiary for widowed/unmarried participants, when calculating a joint and survivor (J&S) annuity form of benefit payment.
How will these changes impact the value of a participant’s retirement benefit?
Factoring in the longer current lifespans means that the new factors will generally result in J&S annuity benefits that are as good as or better than what participants would have received under the previous factors.1 Similarly, other forms of benefit such as the “cash refund” option and the “ten-year certain” annuity, that offer a benefit upon death, also will increase in most cases (but be no lower than under previous factors). Note that the “life-only” annuity (the basic benefit from which all optional forms of benefit are derived) and lump sum benefit calculations are not affected by this change.
What additional data is required to generate benefit projections or calculations?
To fully incorporate the new actuarial factors, requests for benefit projections and retirement calculations for all J&S annuity payment options require the ages of not just the participant but also of his or her spouse or beneficiary. If the date of birth of the spouse or beneficiary is not already stored in NRECA’s calculation system, it will need to be provided at the time the request is submitted in order for the projection/calculation to be completed. 2
The loading and testing of the new actuarial factors was completed during the third quarter of 2017. As a result, all manual benefit projection requests and distribution calculations (distribution option forms) for married participants will now require the date of birth of the spouse or beneficiary, as applicable.
Can the spouse/survivor date of birth be submitted prior to retirement?
Yes, NRECA is conducting a review of the married participant records in the RS Plan to identify those situations where a spouse or beneficiary date of birth is missing. We will be sending a request for this missing data to all co-ops who have participants that fall into this category during the fourth quarter of 2017. For those cooperatives in NRECA’s Group Benefits Program, annual enrollment is a great time to update any missing spouse and beneficiary information.
Participants who are trying to decide whether to retire in 2017 or 2018 could benefit from requesting projections for both years. If they have further questions, they may reach out to NRECA’s Personal Investment & Retirement Consulting (PIRC) team. To reach PIRC, call 866.673.2299, option 6 or email pirc@nreca.coop.
Benefits administrators with questions should call their field representative or the Member Contact Center, 866.673.2299 or contactcenter@nreca.coop.
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1 In cases where the age of the spouse or survivor is significantly different from the age of the RS Plan participant (e.g., more than 25 years younger than the participant), the J&S annuity value could be the same as under the previous factors.
2 The online RS Plan benefit projection system used by co-op benefits administrators may, under certain circumstances, produce a projection for a married participant even if there is no spousal date of birth on file; those projections will assume the spouse’s date of birth is the same as the participant’s date of birth, but the resulting estimate is subject to adjustment once the spouse’s date of birth is considered.